January’s Consumer Price Index (CPI) for Australia has been released, revealing an annual inflation rate standing at 2.5%. This figure fell slightly short of forecasts pegged at 2.6% but remains consistent with last month’s data. Encouragingly, it aligns perfectly with the Reserve Bank of Australia’s (RBA) target range of 2-3%. The RBA and the government have a mutual aim to shoot for the midpoint of this band, so things are looking stable on that front.
However, diving deeper into the details, the trimmed mean—which represents core inflation in Australia—has shown a slight increase, now at 2.8% year over year. While it still stays below the 3% mark, which is good news, it’s worth keeping an eye on.
I can’t stress enough that the monthly figures don’t carry the same heft as the official quarterly numbers. For the latter, we’ll have to wait until April for a more comprehensive view. But for now, what January tells us is reassuring overall.
Interestingly, despite this data, the AUD/USD exchange rate hasn’t moved much, hovering around 0.6351. Today’s results aren’t likely to influence the RBA’s decision to maintain the status quo in their upcoming meetings—they’re probably waiting for the quarterly data due later in April, just like the rest of us.
While the monthly CPI report doesn’t cover every component of the index—that’s reserved for the quarterly data—it does provide a more immediate pulse on inflation trends. With updated prices capturing between 62% and 73% of the quarterly CPI basket’s weight, it’s an insightful snapshot, though not the complete picture.
